Talent, Leadership, and Strategic Workforce Planning Top the List of Critical HR Capabilities in 2012

A Lack of Several People-Management Capabilities Limits Companies Worldwide as They Cope with Talent Shortages and the Complexities of a Two-Speed World, Finds Global Report by BCG/WFPMA


BOSTON, —Throughout the world, companies report deficiencies in three essential areas of people management: managing talent, improving leadership development, and strategic workforce planning. These areas are becoming increasingly critical to businesses, for both the short and the long run, according to a new report issued by The Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA).

Creating People Advantage 2012: Mastering HR Challenges in a Two-Speed World, the third report BCG has produced jointly with the WFPMA, is being released today.

This global report examines important trends in people management by exploring 22 key HR topics and their component activities. Nearly 4,300 HR and non-HR executives from more than 100 countries throughout every major region responded to the 2012 survey, rating the 22 topics in terms of current importance, future importance, and their company’s level of capability. As part of the study, 63 executives participated in in-depth interviews.

Creating People Advantage 2012 also includes the Focus report From Capability to Profitability: Realizing the Value of People Management. The Focus report provides evidence that companies highly capable in 22 key HR topics consistently experienced better economic performance than those less capable—achieving up to 3.5 times more revenue growth and as much as 2.1 times greater average profit margins. The correlation between economic performance and capability in these 22 HR areas was especially striking in six contexts: strategic workforce planning, employer branding, recruiting strategy, recruiting process, on-boarding, and retaining employees.

Most Companies Need to Rev Up Their HR Capabilities

Many HR topics are not being treated with the urgency they deserve, leaving companies underequipped and at risk, according to the full report. “Companies are not making the headway they need to ensure that they have adequate talent—managerial, technical, and functional—in their people pipeline,” explained Jean-Michel Caye, a senior partner at BCG and coauthor of the report. “Many are either ‘hit-or-miss’ in their people-management practices—or have identified their priorities but aren’t translating plans into action. As a result, they undermine their results and lose out on important synergies.”

Accelerating the People Supply for a Two-Speed World

According to the report, the two-speed world has created a new challenge for companies that operate globally: workforce transformation. Among companies with more than 2,000 employees, the majority (52 percent) are facing simultaneous surpluses and shortages. They struggle to build up their workforce in certain regions, business units, and job groups, while laying off employees in others.

“Transformation reflects not only global economic—and demand—shifts but also dramatically different business realities: the shortage of managerial talent in emerging markets alongside an oversupply of employees in established markets,” said Horacio Quiros, past president of the WFPMA and coauthor of the report. As a consequence, HR needs to excel in all dimensions and be equipped to support managers in reducing the workforce and retaining and developing talent—sometimes within the same employee groups.

Added Rainer Strack, a senior partner at BCG and coauthor of the report, “Meeting the complexities of supply and demand in a global economy is yet another reason companies must get serious about implementing strategic workforce planning. It’s the only effective way they can get a handle on the talent they have, the talent they’ll need, and how to bridge critical gaps without losing competitive ground.”

In rapidly developing economies (specifically the BRICS nations of Brazil, Russia, India, China, and South Africa), companies are experiencing the most critical shortages in management and technical skills, the study found. Observed Pieter Haen, president of the WFPMA and another coauthor of the report, “In the BRICS countries, companies can’t rely on their country’s education system or the general workforce to produce the talent they need. But they won’t continue to grow and compete successfully if they can’t acquire or develop the talent.”

Wanted: End to End Approaches in Talent Sourcing and Development

The best companies integrate all the steps of the employee life-cycle to display consistent and efficient practices. They are particularly strong in strategic workforce planning, they tailor their value proposition to different targeted groups, they on-board in a structured fashion, and they manage careers very early after entry.

Among the alarming shortcomings is the disconnect between people planning and recruiting. Less than half of the companies covered by the survey align their recruiting targets with people planning. Amid a growing scarcity of talent, companies can ill afford such wasted effort.

Also, in every one of the crucial steps in talent and leadership development—from developing a talent strategy to creating a talent magnet culture—companies consistently fall short. More than 50 percent of the actions generally deemed necessary were lacking across all companies.

Detailing and enriching an understanding of these pressing issues, the report delves into chapters devoted to integrated people-sourcing management, talent and leadership development, managing people in fast-growing economies, enabling workforce flexibility in a two-speed world, and HR governance. Practical strategies and tactics are offered on each major topic and its component activities.

Mastering HR Challenges in a Two-Speed World, is part of the Creating People Advantage series that BCG has published annually since 2007, together with the WFPMA and the European Association for People Management (EAPM).

A copy of the report can be downloaded at www.bcgperspectives.com or at www.wfpma.com/research.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About The World Federation of People Management Associations

The World Federation of People Management Associations (WFPMA) is a global network of professionals in people management. It was founded in 1976 to aid the development and improve the effectiveness of professional people management all over the world. Its members are predominantly continental federations, which are made of up of more than 90 national personnel associations representing over 600,000 people management professionals. For more information, please visit www.wfpma.com.

About bcgperspectives.com

Bcgperspectives.com is a new website—available on PC, mobile phone, and iPad—that features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management’s agenda. It also provides unprecedented access to BCG’s extensive archive of thought leadership stretching back almost 50 years to the days of Bruce Henderson, the firm’s founder and one of the architects of modern management consulting. All of our content—including videos, podcasts, commentaries, and reports—can be accessed via PC, mobile, iPad, Facebook, Twitter and LinkedIn.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 77 offices in 42 countries.